NVDA Pre-Earnings DD (Sentiment and Technical) To Go with 77k Position

Brief long NVDA thesis for earnings run-up 

Fundamentals 

* AI CAPEX accelerating into FY25 with hyper-scalers guidance (META, GOOG, MSFT, ORCL) 
* Watch for AMZN earnings after mkt tmrw 
* Don’t care if AI is a bubble; companies will keep spending in the short term 
* Continued moat, industry dominance, and margins confidence per AMD earnings 
* NVDA dominance strengthening 
* Deep-seek is Jevon’s paradox 
* Double selloff recently (Deep-seek, tariffs) gave the stock a \~15% haircut, giving room to run 
* China tariffs priced in for now, Singapore an option 

Technical Pre-Earnings Analysis 

* NVDA always bullish, runs-up in the \~2-3 weeks before earnings 
* 1Q24 – 84 to 95 from 5/1 - 5/22 earnings, 13% run 
* 2Q24 – 102 to 127 from 8/8 - 8/28 earnings, 24% run 
* 3Q24 – 134 to 148 from 11/1 - 11/20 earnings, 10% run 
* Taking the midpoint for \~16% run up into 2/26 earnings, PT of \~143 
* 4Q24 forecast run-up of 124 to 143 for \~16% run to pre-Deep-seek levels 
* Intuitive to fill Deep-seek gap, reversion to mean as fear is replaced by optimism leading into earnings 

Risk To Downside  

* Overall further risk to downside is low 
* More Trump volatility, tariffs (more market risk, can be hedged) 
* Poor tech earnings (mostly behind us, trend is CAPEX to continue) 
* Another Deep-seek; depends on perspective, news already expected 
* Worst case stock trades mostly sideways 

Constructing the Trade 

* Anticipating the run-up to 2/26, we notice 2/28 calls are \~2x the price of 2/21 calls 
* 2/21 calls allow us to \~2x exposure to pre-earnings run-up, lose IV increase approaching earnings 
* Discount \~143 PT by \~5% gives \~138 PT for 2/21, 167% upside on the Feb25 130c @ current 3.0 price

Positions 

* 300 Feb25 130c @ 2.58

https://preview.redd.it/a7f8irxehehe1.png?width=1170&format=png&auto=webp&s=e0b1eb860b2846dbe3afeb29721338726a7ca41a